As filed with the Securities and Exchange Commission on March 23, 1998
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1997 Commission File No. 0-19341
BOK FINANCIAL CORPORATION
Incorporated in the State I.R.S. Employer Identification
of Oklahoma No.73-1373454
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Registrant's Telephone Number,
Including Area Code (918) 588-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT: (NONE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
COMMON STOCK ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-X is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: $63,328,413 as of February 28, 1998.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 21,930,457
shares of common stock ($.00006 par value) as of February 28, 1998.
List hereunder the following documents if incorporated by reference and the
part of Form 10-K in which the document is incorporated:
Part I - Annual Report to Shareholders For Fiscal Year Ended December
31, 1997 (designated portions only)
Part II - Annual Report to Shareholders For Fiscal Year Ended December
31, 1997 (designated portions only)
Part III - Proxy Statement for Annual Meeting of Shareholders
scheduled for April 28, 1998 (designated portions only)
Part IV - Annual Report to Shareholders For Fiscal Year Ended December
31, 1997 (designated portions only)
================================================================================
2
BOK FINANCIAL CORPORATION
FORM 10-K ANNUAL REPORT
INDEX
ITEM
PAGE
PART I
1. Business 3
2. Properties 8
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters 8
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Financial Condition and 9
Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk 9
8. Financial Statements and Supplementary Data 9
9. Changes in and Disagreements with Accountants on Accounting and 9
Financial Disclosure
PART III
10. Directors and Executive Officers of the Registrant 9
11. Executive Compensation 9
12. Security Ownership of Certain Beneficial Owners and Management 9
13. Certain Relationships and Related Transactions 9
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 10-14
Signatures 15
3
PART I
ITEM 1 - BUSINESS
General Development of Business
BOK Financial Corporation ("BOK Financial") was incorporated under the
laws of the State of Oklahoma on October 24, 1990. Active operations as a
bank holding company commenced on June 7, 1991 with the acquisition of
the preferred stock ("BOk Preferred Stock") of Bank of Oklahoma, National
Association ("BOk") from the Federal Deposit Insurance Corporation
("FDIC") and the conversion of the BOk Preferred Stock into 99.99% of the
common stock of BOk. BOK Financial is regulated by the Board of Governors
of the Federal Reserve System pursuant to the Bank Holding Company Act of
1956, as amended ("BHCA").
BOK Financial operates primarily through BOk, BOk's subsidiaries, Bank of
Texas, National Association ("BOT") (formerly First National Bank of Park
Cities and First Texas Bank, both of which were acquired during 1997 and
merged on January 1, 1998, and Bank of Texas Trust Company, National
Association, formerly Alliance Trust Company, National Association), and
Bank of Arkansas, National Association ("BOA") (formerly Citizens Bank of
Northwest Arkansas, National Association). The existing and future
activities of BOK Financial and its subsidiaries are limited by the BHCA,
which prohibits a bank holding company from engaging in any business
other than banking, managing or controlling banks, and furnishing and
performing certain bank-related services and activities.
Shares disclosed in the following transactions have not been restated
for subsequent stock dividends.
On June 7, 1991, BOK Financial paid $60.75 million to the FDIC for the
BOk Preferred Stock. To finance this acquisition, BOK Financial issued
preferred stock totaling $15.0 million at $6.00 per share and common
stock ("Common Stock") totaling $46.0 million at $5.75 per share to
George B. Kaiser ("Kaiser"), BOK Financial's principal shareholder.
Kaiser purchased an additional $10.0 million of BOK Financial Common
Stock at $5.75 per share, and BOK Financial contributed the $10.0 million
to BOk as additional capital. Per share amounts reflect a 1-for-100
reverse stock split effective December 17, 1991 ("reverse stock split").
Following a bidding process conducted by the Resolution Trust Corporation
("RTC"), BOK Financial, through the mortgage banking subsidiary of BOk,
BancOklahoma Mortgage Corp. ("BOMC"), acquired on June 10, 1991
approximately $1.0 billion of mortgage servicing rights and certain other
assets of Maxim Mortgage Corporation ("Maxim"). Maxim was formerly a
subsidiary of Sooner Federal Savings and Loan Association, which had
failed and had been placed under the control of the RTC.
Also following a bidding process by the RTC, BOK Financial acquired on
August 9, 1991 certain assets and assumed certain liabilities, primarily
deposits, of eight branches of Continental Federal Savings and Loan
Association of Oklahoma City, Oklahoma. BOK Financial assumed deposits of
approximately $214.5 million and paid the RTC a premium of $4.1 million.
Kaiser acquired an additional $20.0 million of BOK Financial's Common
Stock at $5.75 per share (after effect of the reverse stock split), and
BOK Financial contributed the $20.0 million to BOk to facilitate the
purchase.
On March 27, 1992, BOA acquired certain assets and assumed the deposits
and certain obligations of two branches of the failed Home Federal
Savings & Loan Association from the RTC for $1.1 million.
On July 16, 1992, Bank of Oklahoma, N.A., South, an unconsolidated
banking subsidiary, was merged into BOk.
On November 13, 1992, BOK Financial purchased Southwest Trustcorp, Inc.
and its subsidiary, The Trust Company of Oklahoma, Oklahoma City, in
exchange for 400,000 shares of Common Stock valued at $4.6 million.
On December 31, 1992, BOK Financial acquired certain assets and assumed
$502.9 million of deposits and other liabilities of 19 branches of the
Sooner Division of First Gibraltar Bank, FSB of Irving, Texas for a
purchase price of $16.5 million.
On May 7, 1993, BOK Financial issued 343,295 common shares valued at $6.9
million and paid $3.9 million to acquire Sand Springs Bancshares, Inc.
and its subsidiary, Sand Springs State Bank.
Also on May 7, 1993, BOK Financial issued 1,183,691 common shares to
acquire Brookside Bancshares, Inc. and its subsidiary, Brookside State
Bank, in a pooling-of-interests transaction. Financial information of BOK
Financial for 1992 and 1991 has been restated to reflect this
acquisition.
On October 9, 1993, BOK Financial acquired certain assets and assumed the
deposits and certain obligations of two branches of the failed Heartland
Federal Savings & Loan Association from the FDIC for $5.1 million.
On May 2, 1994, BOK Financial acquired Plaza National Bank, Bartlesville,
Oklahoma for $11.7 million.
On June 13, 1994, BOK Financial acquired Texas Commerce Trust Company -
Sherman, National Association, Sherman, Texas, a national association
limited to trust powers only, for $6.1 million.
4
On October 7, 1994, BOK Financial acquired Northwest Bank of Enid, Enid,
Oklahoma for $8.2 million.
On November 14, 1994, BOK Financial issued 1,380,017 common shares to
acquire Citizens Holding Company and its subsidiaries, Citizens Bank of
Muskogee and Citizens Bank of Northwest Arkansas, in a
pooling-of-interests. Financial information of BOK Financial for 1993 and
1992 has been restated to reflect this acquisition.
On February 12, 1997, BOK Financial acquired Park Cities Bancshares, Inc.
and its subsidiary, First National Bank of Park Cities, in Dallas, Texas
for $50.9 million.
On March 4, 1997, BOK Financial acquired First TexCorp., Inc. and its
subsidiary, First Texas Bank, in Dallas, Texas for $39.3 million.
On January 1, 1998, First National Bank of Park Cities and First Texas
Bank were merged under the name of Bank of Texas, National Association
and Alliance Trust Company, National Association was transferred to BOT
and its name changed to Bank of Texas Trust Company, National
Association.
Developments relating to individual aspects of the business of BOK
Financial are described under "Narrative Description of Business" and
"Services Offered" on page 4 of this report. Additional discussion of BOK
Financial's activities during the current year is incorporated by
reference to "Management's Assessment of Operations and Financial
Condition" (pages 6 - 18) in BOK Financial's 1997 Annual Report to
Shareholders. Additional information regarding BOK Financial's
acquisitions is incorporated by reference to Note 2 of "Notes to
Consolidated Financial Statements" (page 28 ) in BOK Financial's 1997
Annual Report to Shareholders.
Narrative Description of Business
BOK Financial is a bank holding company, and as such, its activities are
limited by the BHCA to banking, certain bank-related services and
activities, and managing or controlling banks. BOK Financial's banking
and bank-related activities are primarily performed through BOk, BOT and
BOA. Other significant operating subsidiaries include BOK Capital
Services Corporation, which provides leasing and mezzanine financing and
Alliance Securities Corporation which is authorized to underwrite
municipal revenue bonds, asset-backed securities and commercial paper.
Other nonbank subsidiary operations are not significant. As of December
31, 1997, BOK Financial and its subsidiaries had 2,318 full-time
equivalent employees. Following is a description of the more significant
services offered by BOK Financial and the competitive and regulatory
environments in which it operates.
Services Offered
Commercial Banking Services
BOK Financial, through BOk, BOT and BOA, provides a wide range of
financial services to commercial and industrial customers, including
depository, lending and other financial services such as cash management,
leasing and international collections. The loan portfolio is comprised
primarily of real estate and commercial loans. The commercial loan
portfolio is diversified and distributed among various commercial and
industrial customers, including energy-related, manufacturing, trade and
service industries.
Correspondent Banking Services
BOK Financial provides a broad range of financial services to banks,
savings and loans, credit unions and other financial institutions in
Oklahoma and surrounding states. BOK Financial works closely with
community financial institutions, assisting them in satisfying the
demands of their customers and trade areas by engaging in loan
participations and providing other financial services.
Consumer Banking Services
At December 31, 1997, BOk had 65 banking locations, with 45 locations in
the Tulsa and Oklahoma City areas. BOT had 4 offices in Dallas and
another trust office in Sherman, Texas, and BOA had 4 locations in
northwest Arkansas. Services offered include deposit accounts,
installment loans, student loans, personal lines of
credit, debit cards, an automated 24-hour telephone loan application
service, a 24-hour telephone branch and telephone and personal computer
based bill paying services. The BancOklahoma Investment Center makes
available, through representatives in most BOk branches, a full range of
mutual funds, annuities and securities. TransFund, BOk's network of
automated teller machines, consists of 782 locations across Oklahoma,
Arkansas, southwest Missouri, northern Texas and southern Kansas.
Investment and Money Market Activities
BOk provides securities brokerage, and trading services for corporations,
governmental units, individual customers and correspondent banks.
Securities include money market instruments, U.S. Government and
municipal bonds, corporate stocks
5
and bonds, and mutual funds. The public
finance department provides bank-eligible underwriting financial
advisory, private placement and term-financing services for governmental
and corporate entities. BOK Financial provides a broad range of financial
services outside those traditionally associated with banking through its
subsidiaries Alliance Securities Corp., which is authorized to provide
financial advisory services to both public and corporate sectors,
underwriting of municipal revenue bonds, mortgage backed debt, consumer
receivables, and commercial paper; and BOK Capital Services Corp. which
provides leasing and mezzanine financing.
Mortgage Banking
BOk through its Mortgage Division (formerly BancOklahoma Mortgage Corp.)
offers a full array of mortgage options from federally sponsored programs
to "jumbo loans" on higher priced houses. BOk is the largest originator
of mortgage loans in Oklahoma and has a servicing portfolio of
approximately $7.0 billion, including $216 million serviced for BOk.
Trust and Asset Management Services
BOK Financial provides a wide range of trust services through BOk's Trust
Division (formerly BancOklahoma Trust Company) in Oklahoma and BOT's Bank
of Texas Trust Company, N.A. in Texas (formerly Alliance Trust Company,
N.A.) Individual financial trust services include personal trust
management, administration of estates and management of individual
investment and custodial accounts. For corporate clients, the services
include management, administration and recordkeeping of pension plans,
thrift plans, 401(k) plans and master trust plans, including a
state-of-the-art system for employee benefit plan recordkeeping. The BOk
trust division also serves as transfer agent and registrar for corporate
securities, paying agent for municipalities and governmental agencies and
indenture trustee of bond issues. The BOK Trust Division serves as an
investment advisor to the American Performance Funds, a family of
proprietary mutual funds distributed by the Winsbury Company of Columbus,
Ohio. At December 31, 1997, trust subsidiaries were responsible for
approximately $11.1 billion in assets.
Foreign Operations
BOK Financial does not engage in operations in foreign countries, nor
does it lend to foreign governments.
Competition
The banking industry in Oklahoma is highly competitive. BOK Financial
competes with other banks in obtaining deposits, making loans and
providing additional services related to banking. There are approximately
320 banks located in Oklahoma, of which approximately 38 are located in
the Tulsa County and surrounding metropolitan area and approximately 53
are located in the Oklahoma County and surrounding metropolitan area. BOK
Financial is also in competition with other businesses engaged in
extending credit or accepting deposits, such as major retail
establishments, major brokerage firms, savings and loan associations,
credit unions, finance companies, small loan companies, insurance
companies and loan production offices of major banks located within and
outside Oklahoma.
Limited branch banking as permitted in Oklahoma is increasing
competition. Generally, a bank may establish two new branch offices
within the town or city where the bank is located or in nearby areas not
already served by a bank or branch, and may acquire an unlimited number
of existing banks and convert them and their branches into branch
offices. Within its primary markets, BOk has 23 locations in the Tulsa
area and 22 locations in the Oklahoma City area, the state's largest
financial markets. Subject to regulatory approval, BOk is considering
various locations for additional facilities. Like BOk, other banks are
taking advantage of the bank branching laws to establish additional
facilities. These additional banking offices are further increasing
competition. Limited branch banking is, on the other hand, permitting
banks to compete more effectively with savings and loan associations,
credit unions and other financial institutions that may establish offices
more freely than banks, some of which are not subject to comparable
regulatory restrictions on their activities.
Oklahoma also permits the acquisition of an unlimited number of
wholly-owned bank subsidiaries so long as aggregate deposits at the time
of acquisition in a multibank holding company do not exceed 15% of all
deposits in Oklahoma financial institutions insured by the federal
government, exclusive of credit union deposits. Based on the latest
statistical data available (as of June 30, 1997), BOK Financial could
acquire additional bank subsidiaries so long as the aggregate deposits of
all Oklahoma subsidiaries do not exceed approximately $5.2 billion.
Deposits of BOk were $3.2 billion and $3.3 billion at June 30, and
December 31, 1997, respectively.
Oklahoma also permits out-of-state bank holding companies to acquire
banks and bank holding companies located in the state and, subject to
certain limitations, make additional acquisitions within the state.
During the last few years the Oklahoma banking industry has been
consolidated into fewer but larger banks. During 1997, two
"super-regional" holding companies completed acquisitions of the second
and third largest banks in Oklahoma. The consolidation over the past
several years has brought about a highly competitive environment, in
which many customers have access to national and regional financial
institutions for many products and services.
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 ("Riegle-Neal") was signed into law. In summary,
commencing one year after passage, qualifying bank holding companies were
permitted to acquire
6
banks in any state. As of June 1, 1997,
qualifying banks were able to engage in interstate branching by merging
banks in different states. States " opt-out" of interstate branching by
enacting specific legislation prior to June 1, 1997, in which case
out-of-state banks would generally not be able to branch into that state,
and banks headquartered in that state would not be permitted to branch
into other states. The law imposes a 10% nationwide
deposit cap and a 30% state deposit cap; however, the states' authority
is preserved to impose a lower, nondiscriminatory deposit cap. Oklahoma
elected to "opt-in" to interstate branching effective May 1997 and
established a 12.25% deposit cap which was subsequently increased to 15%.
It is anticipated that the total number of Oklahoma banks may decrease
and national and regional bank presence in the state may increase. Over
the near-term, these changes are expected to increase competition with a
greater number of products and services available to Oklahoma customers.
Over the long-term, the number of competitors could decrease, depending
on the extent of consolidations nationwide, but competition could
continue to increase as a result of the remaining institutions needing to
be stronger, more innovative and more aggressive to retain a significant
presence in a consolidated environment.
Additional legislation, judicial and administrative decisions also may
affect the ability of banks to compete with each other as well as with
other businesses. These statutes and decisions may tend to make the
operations of various financial institutions more similar and increase
competition among banks and other financial institutions or limit the
ability of banks to compete with other businesses. Management currently
cannot predict whether and, if so, when any such changes might occur or
the impact any such changes would have upon the income or operations of
BOK Financial or its subsidiaries, or upon the Oklahoma regional banking
environment.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under both
federal and state law. The following information, to the extent it
describes statutory or regulatory provisions, is qualified in its
entirety by reference to the particular statutory and regulatory
provisions. It is not possible to predict the changes, if any, that may
be made to existing banking laws and regulations or whether such changes,
if made, would have a materially adverse effect on the business and
prospects of BOK Financial, BOk, BOT and BOA.
BOK Financial
As a bank holding company, BOK Financial is subject to regulation under
the BHCA and to supervision by the Board of Governors of the Federal
Reserve System (the "Reserve Board"). Under the BHCA, BOK Financial is
required to file with the Reserve Board an annual report and such other
additional information as the Reserve Board may require. The Reserve
Board may also make examinations of BOK Financial and its subsidiaries.
The BHCA requires the prior approval of the Reserve Board in any case
where a bank holding company proposes to acquire control of more than
five percent of the voting shares of any bank, unless it already controls
a majority of such voting shares. Additionally, approval must also be
obtained before a bank holding company may acquire all or substantially
all of the assets of another bank or before it may merge or consolidate
with another bank holding company. The BHCA further provides that the
Reserve Board shall not approve any such acquisition, merger or
consolidation that will substantially lessen competition, tend to create
a monopoly or be in restraint of trade, unless it finds the
anti-competitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the community to be
served.
The BHCA also prohibits a bank holding company, with certain exceptions,
from acquiring more than five percent of the voting shares of any company
that is not a bank and from engaging in any business other than banking
or managing or controlling banks. Under the BHCA, the Reserve Board is
authorized to approve the ownership of shares by a bank holding company
in any company whose activities the Reserve Board has determined to be so
closely related to banking or to managing or controlling banks as to be a
proper incident thereto. In making such determinations, the Reserve Board
weighs the Community Reinvestment Act activities of the bank holding
company and the expected benefit to the public, such as greater
convenience, increased competition or gains in efficiency, against the
possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest or unsound banking
practices. The Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA.
These activities include operating a mortgage company, finance company,
credit card company or factoring company; performing certain data
processing operations; servicing loans and other extensions of credit;
providing investment and financial advice; acting as an insurance agent
for certain types of credit-related insurance; owning and operating
savings and loan associations; and leasing personal property on a
full-payout, nonoperating basis.
A bank holding company and its subsidiaries are further prohibited under
the BHCA from engaging in certain tie-in arrangements in connection with
the provision of any credit, property or services. Thus, a subsidiary of
a bank holding
7
company may not extend credit, lease or sell property,
furnish any services or fix or vary the consideration for these
activities on the condition that (1) the customer obtain or provide some
additional credit, property or services from or to the bank holding
company or any subsidiary thereof or (2) the customer may not obtain some
other credit, property or services from a competitor, except to the
extent reasonable conditions are imposed to insure the soundness of
credit extended.
The Federal Deposit Insurance Corporation Improvement Act of 1991
established five capital rating tiers ranging from "well capitalized" to
"critically undercapitalized". A financial institution is considered to
be well capitalized if its Leverage, Tier 1 and Total Capital ratios are
at 5%, 6% and 10%, respectively. Any institution experiencing significant
growth or acquiring other institutions or branches is expected to
maintain capital ratios above the well capitalized level. At December 31,
1997, BOK Financial's Leverage, Tier 1 and Total Capital ratios were
6.81%, 9.39% and 14.54%, respectively.
Bank Subsidiaries
BOk, BOT and BOA are national banking associations and are subject to the
National Banking Act and other federal statutes governing national banks.
Under federal law, the Office of the Comptroller of the Currency
("Comptroller") charters, regulates and serves as the primary regulator
of national banks. In addition, the Comptroller must approve certain
corporate or structural changes, including an increase or decrease in
capitalization, payment of dividends, change of place of business,
establishment of a branch and establishment of an operating subsidiary.
The Comptroller performs its functions through national bank examiners
who provide the Comptroller with information concerning the soundness of
a national bank, the quality of management and directors, and compliance
with applicable laws, rules and regulations. The National Banking Act
authorizes the Comptroller to examine every national bank as often as
necessary. Although the Comptroller has primary supervisory
responsibility for national banks, such banks must also comply with
Reserve Board rules and regulations as members of the Federal Reserve
System.
BOA is also subject to certain consumer-protection laws incorporated in
the Arkansas Constitution, which, among other restrictions, limit the
maximum interest rate on general loans to five percent above the Federal
Reserve Discount Rate. The rate on consumer loans is five percent above
the discount rate or seventeen percent, whichever is lower.
BOk, BOT and BOA are insured by the FDIC and are required to pay certain
fees and premiums to the Bank Insurance Fund ("BIF"). The BIF has
implemented a risk-related insurance system for determining premiums to
be paid by a bank. Each bank is placed in one of nine risk categories
based on its level of capital and supervisory rating with the
well-capitalized banks with the highest supervisory rating paying a
premium of 0.00% of deposits and the critically undercapitalized banks
paying up to 0.27% of deposits. Also, approximately 19% of BOK
Financial's total deposits at December 31, 1997 were acquired through
Oakar transactions and are insured through the Savings Association
Insurance Fund ("SAIF"). The Deposit Insurance Funds Act of 1996 was
enacted on September 30, 1996, which recapitalized the SAIF and
implemented a risk-related insurance system identical to the BIF system
discussed above. In addition, the Deposit Insurance Fund Act of 1996
implemented an additional assessment on BIF and SAIF deposits, the
Financing Corporation ("FICO") Quarterly Payment, which is not tied to
the BIF risk classification. The FICO BIF annual rate at December 31,
1997 was 1.256 basis points and the FICO SAIF annual rate was 6.28 basis
points.
Applicable federal statutes and regulations require national banks to
meet certain leverage and risk-based capital requirements. At December
31, 1997, BOk's, BOT's and BOA's leverage and risk-based capital ratios
were well above the required minimum ratios.
8
Governmental Policies and Economic Factors
The operations of BOK Financial and its subsidiaries are affected by
legislative changes and by the policies of various regulatory authorities
and, in particular, the credit policies of the Reserve Board. An
important function of the Reserve Board is to regulate the national
supply of bank credit. Among the instruments of monetary policy used by
the Reserve Board to implement its objectives are: open market operations
in U.S. Government securities; changes in the discount rate on bank
borrowings; and changes in reserve requirements on bank deposits. The
effect of such policies in the future on the business and earnings of BOK
Financial and its subsidiaries cannot be predicted with certainty.
ITEM 2 - PROPERTIES
BOK Financial, through BOk, BOk's subsidiaries, BOT and BOA, owns
improved real estate that was carried at $43.0 million, net of
depreciation and amortization, as of December 31, 1997. BOK Financial
conducts its operations through a total of 65 banking and 4 nonbanking
locations in Oklahoma, 4 banking locations in Arkansas and 4 banking and
2 nonbanking locations in Texas as of December 31, 1997. BOk's facilities
are suitable for their respective uses and present needs.
The information set forth in Notes 6 and 13 of "Notes to Consolidated
Financial Statements" (pages 32 and 38, respectively) of BOK Financial's
1997 Annual Report to Shareholders provides further discussion related to
properties and is incorporated herein by reference.
ITEM 3 - LEGAL PROCEEDINGS
The information set forth in Note 13 of "Notes to Consolidated Financial
Statements" (page 38) of BOK Financial's 1997 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended
December 31, 1997.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
BOK Financial's $.00006 par value common stock is traded over-the-counter
and is reported on the facilities of the National Association of
Securities Dealers Automated Quotation system ("NASDAQ"), with the symbol
BOKF. At December 31, 1997, common shareholders of record numbered 1,227
with 21,909,370 shares outstanding.
During 1997, BOK Financial declared a 3% stock dividend in respect of its
Common Stock payable in shares of Common Stock. The dividend was payable
on November 26, 1997 to shareholders of record on November 17, 1997. BOK
Financial's quarterly market information follows:
First Second Third Fourth
--------------- -------------- -------------- ---------------
1997:
Low $27.75 $29.25 $32.75 $38.81
High 31.50 36.00 40.50 44.00
1996:
Low $19.25 $20.00 $21.25 $23.25
High 23.25 22.75 23.75 28.00
On February 25, 1998, BOK Financial announced that its board of directors
approved a common stock repurchase program to purchase up to 200,000
shares. The purchases will be made from time-to-time in accordance with
SEC Rule 10(b)18 transactions.
The information set forth under the captions "Table 1 - Consolidated
Selected Financial Data" (page 5), "Table 6 - Selected Quarterly
Financial Data" (page 12) and Note 15 of "Notes to Consolidated Financial
Statements" (page 39) of BOK Financial's 1997 Annual Report to
Shareholders is incorporated herein by reference.
9
ITEM 6 - SELECTED FINANCIAL DATA
The information set forth under the caption "Table 1 - Consolidated
Selected Financial Data" (page 5) of BOK Financial's 1997 Annual Report
to Shareholders is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the captions "Management's Assessment of
Operations and Financial Condition" (pages 6 - 18), "Annual Financial
Summary - Unaudited" (pages 44 - 45) and "Quarterly Financial Summary -
Unaudited" (pages 46 - 47) of BOK Financial's 1997 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the caption "Market Risk" (pages 17-18)
of BOK Financial's 1997 Annual Report to Shareholders is incorporated
herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The supplementary data regarding quarterly results of operations set
forth under the caption "Table 6 - Selected Quarterly Financial Data"
(page 12) of BOK Financial's 1997 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Election of Directors" and
"Executive Compensation" in BOK Financial's 1997 Annual Proxy Statement
for its Annual Meeting of Shareholders scheduled for April 28, 1998
("1997 Annual Proxy Statement") is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation" in
BOK Financial's 1997 Annual Proxy Statement is incorporated herein by
reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Security Ownership of
Certain Beneficial Owners and Management" and "Election of Directors" in
BOK Financial's 1997 Annual Proxy Statement is incorporated herein by
reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Transactions" in BOK
Financial's 1997 Annual Proxy Statement is incorporated herein by
reference.
The information set forth under Notes 3, 5 and 9 of "Notes to
Consolidated Financial Statements" (pages 29, 31, and 34, respectively)
of BOK Financial's 1997 Annual Report to Shareholders is incorporated
herein by reference.
10
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) LIST OF FINANCIAL STATEMENTS FILED.
The following financial statements and reports included in BOK
Financial's Annual Report to Shareholders for the Fiscal Year Ended
December 31, 1997 are incorporated by reference in Parts I and II of this
Annual Report on Form 10-K.
1997 Annual Report
Description Page Number
Consolidated Selected Financial Data 5
Selected Quarterly Financial Data 12
Report of Management on Financial Statements 19
Report of Independent Auditors 19
Consolidated Statements of Earnings 20
Consolidated Balance Sheets 21
Consolidated Statements of Changes in Shareholders' Equity 22-23
Consolidated Statements of Cash Flows 24
Notes to Consolidated Financial Statements 25-43
Annual Financial Summary - Unaudited 44-45
Quarterly Financial Summary - Unaudited 46-47
(A)(2) List of Financial Statement Schedules filed.
The schedules to the consolidated financial statements required by
Regulation S-X are not required under the related instructions or are
inapplicable and are therefore omitted.
(A)(3) LIST OF EXHIBITS FILED.
Exhibit Number Description of Exhibit
3.0 The Articles of Incorporation of BOK Financial, incorporated by
reference to (i) Amended and Restated Certificate of
Incorporation of BOK Financial filed with the Oklahoma Secretary
of State on May 28, 1991, filed as Exhibit 3.0 to S-1
Registration Statement No. 33-90450, and (ii) Amendment attached
as Exhibit A to Information Statement and Prospectus Supplement
filed November 20, 1991.
3.1 Bylaws of BOK Financial, incorporated by reference to Exhibit 3.1
of S-1 Registration Statement No. 33-90450.
4.0 The rights of the holders of the Common Stock and Preferred Stock
of BOK Financial are set forth in its Certificate of
Incorporation.
10.0 Purchase and Sale Agreement dated October 25, 1990, among BOK
Financial, Kaiser, and the FDIC, incorporated by reference to
Exhibit 2.0 of S-1 Registration Statement No. 33-90450.
11
10.1 Amendment to Purchase and Sale Agreement effective March 29,
1991, among BOK Financial, Kaiser, and the FDIC, incorporated by
reference to Exhibit 2.2 of S-1 Registration Statement No.
33-90450
10.2 Letter agreement dated April 12, 1991, among BOK Financial,
Kaiser, and the FDIC, incorporated by reference to Exhibit 2.3 of
S-1 Registration Statement No. 33-90450.
10.3 Second Amendment to Purchase and Sale Agreement effective April
15, 1991, among BOK Financial, Kaiser, and the FDIC, incorporated
by reference to Exhibit 2.4 of S-1 Registration Statement No.
33-90450.
10.4 Employment agreements.
10.4(a) Employment Agreement between BOk and Stanley A. Lybarger,
incorporated by reference to Exhibit 10.4(a) of Form 10-K for the
fiscal year ended December 31, 1991.
10.5 Director indemnification agreement dated June 30, 1987, between
BOk and Kaiser, incorporated by reference to Exhibit 10.5 of S-1
Registration Statement No. 33-90450. Substantially similar
director indemnification agreements were executed between BOk and
the following:
Date of Agreement
James E. Barnes June 30, 1987
William H. Bell June 30, 1987
James S. Boese June 30, 1987
Dennis L. Brand June 30, 1987
Chester E. Cadieux June 30, 1987
William B. Cleary June 30, 1987
Glenn A. Cox June 30, 1987
William E. Durrett June 30, 1987
Leonard J. Eaton, Jr. June 30, 1987
William B. Fader December 5, 1990
Gregory J. Flanagan June 30, 1987
Jerry L. Goodman June 30, 1987
David A. Hentschel July 7, 1987
Philip N. Hughes July 8, 1987
Thomas J. Hughes, III June 30, 1987
William G. Kerr June 30, 1987
Philip C. Lauinger, Jr. June 30, 1987
Stanley A. Lybarger December 5, 1990
Patricia McGee Maino June 30, 1987
Robert L. Parker, Sr. June 30, 1987
James A. Robinson June 30, 1987
William P. Sweich June 30, 1987
10.6 Capitalization and Stock Purchase Agreement dated May 20, 1991,
between BOK Financial and Kaiser, incorporated by reference to
Exhibit 10.6 of S-1 Registration Statement No. 33-90450.
10.7 BOK Financial Corporation 1991 Special Stock Option Plan,
incorporated by reference to Exhibit 4.0 of S-8 Registration
Statement No. 33-44122.
10.7.1 BOK Financial Corporation 1992 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
33-55312.
10.7.2 BOK Financial Corporation 1993 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
33-70102.
10.7.3 BOK Financial Corporation 1994 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
33-79834.
12
10.7.4 BOK Financial Corporation 1994 Stock Option Plan (Typographical
Error Corrected January 16, 1995), incorporated by reference to
Exhibit 10.7.4 of Form 10-K for the fiscal year ended December
31, 1994.
10.7.5 BOK Financial Corporation 1997 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
33-32642.
10.7.6 BOK Financial Corporation Directors' Stock Compensation Plan,
incorporated by reference to Exhibit 4.0 of S-8 Registration
Statement No. 33-79836.
10.7.7 Bank of Oklahoma Thrift Plan (Amended and Restated Effective as
of January 1, 1995), incorporated by reference to Exhibit 10.7.6
of Form 10-K for the year ended December 31, 1994.
10.7.8 Trust Agreement for the Bank of Oklahoma Thrift Plan (December
30, 1994), incorporated by reference to Exhibit 10.7.7 of Form
10-K for the year ended December 31, 1994.
10.8 Lease Agreement between One Williams Center Co. and National Bank
of Tulsa (predecessor to BOk) dated June 18, 1974, incorporated
by reference to Exhibit 10.9 of S-1 Registration Statement No.
33-90450.
10.9 Lease Agreement between Security Capital Real Estate Fund and BOk
dated January 1, 1988, incorporated by reference to Exhibit 10.10
of S-1 Registration Statement No. 33-90450.
10.10 Asset Purchase Agreement (OREO and other assets) between BOk and
Phi-Lea-Em Corporation dated April 30, 1991, incorporated by
reference to Exhibit 10.11 of S-1 Registration Statement No.
33-90450.
10.11 Asset Purchase Agreement (Tanker Assets) between BOk and Green
River Exploration Company dated April 30, 1991, incorporated by
reference to Exhibit 10.12 of S-1 Registration Statement No.
33-90450.
10.12 Asset Purchase Agreement (Recovery Rights) between BOk and
Kaiser dated April 30, 1991, incorporated by reference to Exhibit
10.13 of S-1 Registration Statement No. 33-90450.
10.13 Purchase and Assumption Agreement dated August 7, 1992 among
First Gibraltar Bank, FSB, Fourth Financial Corporation and BOk,
as amended, incorporated by reference to Exhibit 10.14 of Form
10-K for the fiscal year ended December 31, 1992.
10.13.1 Allocation Agreement dated August 7, 1992 between BOk and
Fourth Financial Corporation, incorporated by reference to
Exhibit 10.14.1 of Form 10-K for the fiscal year ended December
31, 1992.
10.14 Merger Agreement among BOK Financial, BOKF Merger Corporation
Number Two, Brookside Bancshares, Inc., The Shareholders of
Brookside Bancshares, Inc. and Brookside State Bank dated
December 22, 1992, as amended, incorporated by reference to
Exhibit 10.15 of Form 10-K for the fiscal year ended December 31,
1992.
10.14.1 Agreement to Merge between BOk and Brookside State Bank dated
January 27, 1993, incorporated by reference to Exhibit 10.15.1 of
Form 10-K for the fiscal year ended December 31, 1992.
10.15 Merger Agreement among BOK Financial, BOKF Merger Corporation
Number Three, Sand Springs Bancshares, Inc., The Shareholders of
Sand Springs Bancshares, Inc. and Sand Springs State Bank dated
December 22, 1992, as amended, incorporated by reference to
Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1992.
10.15.1 Agreement to Merge between BOk and Sand Springs State Bank
dated January 27, 1993, incorporated by reference to Exhibit
10.16.1 of Form 10-K for the fiscal year ended December 31, 1992.
13
10.16 Partnership Agreement between Kaiser-Francis Oil Company and BOK
Financial dated December 1, 1992, incorporated by reference to
Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1993.
10.16.1 Amendment to Partnership Agreement between Kaiser-Francis Oil
Company and BOK Financial dated May 17, 1993, incorporated by
reference to Exhibit 10.16.1 of Form 10-K for the fiscal year
ended December 31, 1993.
10.17 Purchase and Assumption Agreement between BOk and FDIC, Receiver
of Heartland Federal Savings and Loan Association dated October
9, 1993, incorporated by reference to Exhibit 10.17 of Form 10-K
for the fiscal year ended December 31, 1993.
10.18 Merger Agreement among BOk, Plaza National Bank and The
Shareholders of Plaza National Bank dated December 20, 1993,
incorporated by reference to Exhibit 10.18 of Form 10-K for the
fiscal year ended December 31, 1993.
10.18.1 Amendment to Merger Agreement among BOk, Plaza National Bank
and The Shareholders of Plaza National Bank dated January 14,
1994, incorporated by reference to Exhibit 10.18.1 of Form 10-K
for the fiscal year ended December 31, 1993.
10.19 Stock Purchase Agreement between Texas Commerce Bank, National
Association and BOk dated March 11, 1994, incorporated by
reference to Exhibit 10.19 of Form 10-K for the fiscal year ended
December 31, 1993.
10.20 Merger Agreement among BOK Financial Corporation, BOKF Merger
Corporation Number Four, Citizens Holding Company and others
dated May 11, 1994, incorporated by reference to Exhibit 10.20 of
Form 10-K for the fiscal year ended December 31, 1994.
10.21 Stock Purchase and Merger Agreement among Northwest Bank of
Enid, BOk and The Shareholders of Northwest Bank of Enid
effective as of May 16, 1994, incorporated by reference to
Exhibit 10.21 of Form 10-K for the fiscal year ended December 31,
1994.
10.22 Agreement and Plan of Merger among BOK Financial Corporation,
BOKF Merger Corporation Number Five and Park Cities Bancshares,
Inc. dated October 3, 1996, incorporated by reference to Exhibit
C of S-4 Registration Statement No. 333-16337.
10.23 Agreement and Plan of Merger among BOK Financial Corporation and
First TexCorp., Inc. dated December 18, 1996, incorporated by
reference to Exhibit 10.24 of S-4 Registration Statement No.
333-16337.
13.0 Annual Report to Shareholders for the fiscal year ended December
31, 1997. Such report, except for those portions thereof which
are expressly incorporated by reference in this filing, is
furnished for the information of the Commission and is not deemed
to be "filed" as part of this Annual Report on Form 10-K.
21.0 Subsidiaries of BOK Financial.
23.0 Consent of independent auditors - Ernst & Young LLP.
27.0 Financial Data Schedule for year ended December 31, 1997
27.1 Restated Financial Data Schedules
99.0 Additional Exhibits.
99.1 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-44121 for Bank of Oklahoma Master Thrift Plan
and Trust, incorporated by reference to Exhibit 99.1 of Form 10-K
for the fiscal year ended December 31, 1993.
99.2 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-44122 for BOK Financial Corporation 1991 Special
Stock Option Plan, incorporated by reference to Exhibit 99.2 of
Form 10-K for the fiscal year ended December 31, 1993.
99.3 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-55312 for BOK Financial Corporation 1992 Stock
Option Plan, incorporated by reference to Exhibit 99.3 of Form
10-K for the fiscal year ended December 31, 1993.
14
99.4 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-70102 for BOK Financial Corporation 1993 Stock
Option Plan, incorporated by reference to Exhibit 99.4 of Form
10-K for the fiscal year ended December 31, 1993.
99.5 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-79834 for BOK Financial Corporation 1994 Stock
Option Plan, incorporated by reference to Exhibit 99.5 of Form
10-K for the fiscal year ended December 31, 1994.
99.6 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-79836 for BOK Financial Corporation Directors'
Stock Compensation Plan, incorporated by reference to Exhibit
99.6 of Form 10-K for the fiscal year ended December 31, 1994.
99.7 Unertakings incorporated by reference into S-8 Registration
Statement No. 33-32642 for BOK financial Corporation 1997 Stock
Option Plan, Incorporated by reference to Exhibit 99.7 of Form
10-K for the fiscal year ended December 31, 1997.
(B) REPORTS ON FORM 8-K
None.
(C) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
The exhibits listed in response to Item 14(A)(3) are filed as part of
this report.
(D) FINANCIAL STATEMENT SCHEDULES
None.
15
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BOK FINANCIAL CORPORATION
DATE: March 23, 1998 BY: /s/George B. Kaiser
----------------------------------
George B. Kaiser,
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 23, 1998 , by the following persons
on behalf of the Registrant and in the capacities indicated.
OFFICERS
/s/ George B. Kaiser /s/ Stanley A. Lybarger
- --------------------------------- -----------------------------
George B. Kaiser, Stanley A. Lybarger,
Chairman of the Board of Directors Director, President and Chief
Executive Officer
/s/ James A. White /s/ John C. Morrow
- --------------------------------- -----------------------------
James A. White, John C. Morrow
Executive Vice President and Senior Vice President and
Chief Financial Officer/Treasurer Controller, Financial Accounting
DIRECTORS
/s/ Robert J. LaFortune
----------------------------------- ----------------------------------------
W. Wayne Allen Robert J. LaFortune
/s/ Keith E. Bailey /s/ Philip C. Lauinger, Jr.
----------------------------------- ----------------------------------------
Keith E. Bailey Philip C. Lauinger, Jr.
/s/ David R. Lopez
----------------------------------- ----------------------------------------
James E. Barnes David R. Lopez
/s/ Sharon J. Bell /s/ Frank A. McPherson
---------------------------------- ---------------------------------------
Sharon J. Bell Frank A. McPherson
/s/ Glenn A. Cox
----------------------------------- ----------------------------------------
Glenn A. Cox J. Larry Nichols
/s/ Nancy J. Davies /s/ Robert L. Parker, Sr.
----------------------------------- ----------------------------------------
Nancy J. Davies Robert L. Parker, Sr.
---------------------------------- ----------------------------------------
Robert H. Donaldson James W. Pielsticker
---------------------------------- ----------------------------------------
William E. Durrett E.C. Richards
/s/ James A. Robinson
---------------------------------- ----------------------------------------
James O. Goodwin James A. Robinson
/s/ V. Burns Hargis /s/ L. Francis Rooney, III
---------------------------------- ----------------------------------------
V. Burns Hargis L. Francis Rooney, III
/s/ E. Carey Joullian, IV /s/ Robert L. Zemanek
---------------------------------- ----------------------------------------
E. Carey Joullian, IV Robert L. Zemanek